US banks kick off third quarter earnings season

This week marked the official start of earnings season with major US banks reporting quarterly earnings. JP Morgan Chase led the banking sector higher as the bank posted record revenue for the quarter, beating analysts’ estimates. Both quarterly revenue and profits increased by 8% due to robust consumer banking operations.

On the negative side, investors were disappointed with Goldman Sachs results as profits came in worse than expected.

The bank reported a 26% decline in profit with the firm’s investing and lending division dragging down its quarterly results. Net Interest Margins were once again one of investor’s key focus following two rate cuts by the United States Federal Reserve since the previous quarter’s earnings season.

Net Interest Income (NII) accounts for the difference in interest rates offered on deposits and the rates charged on loans, which are both sensitive to what the Fed decides. In fact, earlier in the quarter major lenders had warned that NII would be lower than guidance following the Fed’s shift to a more accommodative monetary easing policy. Wells Fargo NII came in slightly below estimates with its margin falling to 2.66% from 2.94%.

Similarly, Citigroup...